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Interest Rates: Why Is My Credit Card APR So High?

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Interest rates almost across the board are at rock-bottom rates. It is easier to get approved for auto loans, home equity loans, and most other lines of credit, even with some late payments or other credit report blemishes. Unfortunately, one type of credit has not seen a drop in the average APR, and it could hit consumers unexpectedly.

The annual percentage rate (APR) on variable-rate credit cards is now at 15.31 percent, whereas other lines of credit have APRs in the single-digits. To give context, a 30-year fixed mortgage rate is currently around 4.6 percent.

Why are credit card APRs so high? Most of the blame can be placed on the credit card companies. The CARD Act prohibited credit card companies from increasing interest rates in the first year, placed a cap on penalty fees, and put in place other consumer protections which were meant to decrease excessive credit card fees. The problem is that credit card companies are now trying to make up for those losses by increasing APRs and annual fees for credit card users. The CARD Act protects consumers in some ways, but instead of accepting lower profits, the credit card companies are finding new ways to get more money from their customers.

At My Credit Specialist, we always recommend that customers keep their credit cards active while also maintaining a low balance. A low balance leads to lower credit utilization and a higher credit score, but additionally, a low balance will reduce the amount of money you will throw away on interest charges.

Want more credit tips and consumer alerts? Stay connected with My Credit Specialist on Facebook, Twitter, and YouTube, and go to http://www.mycreditspecialist.com to find out if credit restoration is the right choice for you!

Image courtesy of Pixomar / FreeDigitalPhotos.net


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